diff --git a/stl/inc/functional b/stl/inc/functional
index 4d7e5290cde..f40b516e819 100644
--- a/stl/inc/functional
+++ b/stl/inc/functional
@@ -795,7 +795,8 @@ private:
 constexpr size_t _Space_size = (_Small_object_num_ptrs - 1) * sizeof(void*);
 
 template <class _Impl> // determine whether _Impl must be dynamically allocated
-_INLINE_VAR constexpr bool _Is_large = (_Space_size < sizeof(_Impl)) || !_Impl::_Nothrow_move::value;
+_INLINE_VAR constexpr bool _Is_large = sizeof(_Impl) > _Space_size || alignof(_Impl) > alignof(max_align_t)
+                                       || !_Impl::_Nothrow_move::value;
 
 #if _HAS_FUNCTION_ALLOCATOR_SUPPORT
 // CLASS TEMPLATE _Func_impl
diff --git a/tests/std/test.lst b/tests/std/test.lst
index aca5c46b5d3..fa0e5e35ce7 100644
--- a/tests/std/test.lst
+++ b/tests/std/test.lst
@@ -157,6 +157,7 @@ tests\Dev11_1158803_regex_thread_safety
 tests\Dev11_1180290_filesystem_error_code
 tests\GH_000457_system_error_message
 tests\GH_000545_include_compare
+tests\GH_000690_overaligned_function
 tests\P0024R2_parallel_algorithms_adjacent_difference
 tests\P0024R2_parallel_algorithms_adjacent_find
 tests\P0024R2_parallel_algorithms_all_of
diff --git a/tests/std/tests/GH_000690_overaligned_function/env.lst b/tests/std/tests/GH_000690_overaligned_function/env.lst
new file mode 100644
index 00000000000..19f025bd0e6
--- /dev/null
+++ b/tests/std/tests/GH_000690_overaligned_function/env.lst
@@ -0,0 +1,4 @@
+# Copyright (c) Microsoft Corporation.
+# SPDX-License-Identifier: Apache-2.0 WITH LLVM-exception
+
+RUNALL_INCLUDE ..\usual_matrix.lst
diff --git a/tests/std/tests/GH_000690_overaligned_function/test.cpp b/tests/std/tests/GH_000690_overaligned_function/test.cpp
new file mode 100644
index 00000000000..effd03765af
--- /dev/null
+++ b/tests/std/tests/GH_000690_overaligned_function/test.cpp
@@ -0,0 +1,63 @@
+// Copyright (c) Microsoft Corporation.
+// SPDX-License-Identifier: Apache-2.0 WITH LLVM-exception
+
+#include <cassert>
+#include <cstddef>
+#include <cstdint>
+#include <functional>
+
+#pragma warning(disable : 4324) // structure was padded due to alignment specifier
+
+// SFO (Small Functor Optimization) should not happen
+struct alignas(2 * alignof(std::max_align_t)) overaligned_t {
+    char non_empty;
+
+    void operator()(const void* const storage, const std::size_t storage_size) const {
+        const auto storage_ptr_value = reinterpret_cast<std::uintptr_t>(storage);
+        const auto this_ptr_value    = reinterpret_cast<std::uintptr_t>(this);
+
+        // Platform-specific behavior not covered by Standard C++, but fine for this test
+        assert(this_ptr_value < storage_ptr_value || this_ptr_value >= storage_ptr_value + storage_size);
+
+        // Before C++17, alignas isn't helpful for aligning allocations via "new"
+#ifdef __cpp_aligned_new
+        assert(this_ptr_value % alignof(overaligned_t) == 0);
+#endif
+    }
+};
+
+// SFO should happen
+struct not_overaligned_t {
+    char data[sizeof(overaligned_t)];
+
+    void operator()(const void* const storage, const std::size_t storage_size) const {
+        const auto storage_ptr_value = reinterpret_cast<std::uintptr_t>(storage);
+        const auto this_ptr_value    = reinterpret_cast<std::uintptr_t>(this);
+
+        // Platform-specific behavior not covered by Standard C++, but fine for this test
+        assert(this_ptr_value >= storage_ptr_value && this_ptr_value < storage_ptr_value + storage_size);
+    }
+};
+
+static_assert(alignof(overaligned_t) > alignof(std::max_align_t), "overaligned_t is not overaligned");
+
+using function_t = std::function<void(const void* storage, std::size_t storage_size)>;
+
+struct functions_t {
+    function_t first{overaligned_t{}};
+    char smallest_pad;
+    function_t second{overaligned_t{}};
+    function_t third{overaligned_t{}};
+};
+
+int main() {
+    functions_t functions;
+    functions.first(&functions.first, sizeof(functions.first));
+    functions.second(&functions.second, sizeof(functions.second));
+    functions.third(&functions.third, sizeof(functions.third));
+
+    function_t sfo{not_overaligned_t{}};
+    sfo(&sfo, sizeof(sfo));
+
+    return 0;
+}